It’s a New Game for Uber Drivers If New York Passes This Law

A gig-economy startup is pushing legislation to offer workers limited benefit funds without full employee rights.

Oisin Hanrahan has big plans and a big problem. The plan is for his city-focused startup, Handy—which sends people to your home to clean up or make repairs—to deliver every kind of home service anywhere. Problem is, it’s not clear his business model is legal. Now he’s helping develop a bill that could have big repercussions for Uber, Instacart, TaskRabbit, and other so-called gig-economy businesses.

Like those companies, Handy, which Hanrahan co-founded in 2012 with a fellow Harvard Business School student, treats workers as independent contractors. That means it doesn’t consider them employees entitled to payroll tax contributions, anti-discrimination protections, or collective bargaining rights under federal law. And like Uber, Handy has been sued by former workers who say that given how much control the company exercised over their work, they deserved to have been treated as employees.

Hanrahan

Photographer: Stephen McCarthy/Sportsfile via Getty Images

Workers have brought potential class actions against Hanrahan’s company under California, Massachusetts, and federal law, and some are also pressing their case with the National Labor Relations Board. Handy persuaded a judge to send the California case to arbitration; it’s trying to do the same with other claims and has denied its cleaners are employees. At the same time, Hanrahan echoes a common tech-industry refrain: Workers who love the flexibility and “empowerment” of at-will labor are the ones suffering most under what he calls Flintstones-era laws in a Jetsons world.

“It sucks for them,” he says, because he’d gladly provide training and benefits if it wouldn’t make him more likely to be deemed an employer. So he’s campaigning for legislative changes that would make it easier for him to keep treating his workers as contractors even if he boosts their perks. Incidentally, he says, “it would definitely help with some of the litigation that’s in play.”

The first target is Handy’s home state, New York. Since last year the company has been working with a pair of influential Democratic legislators and the trade group Tech:NYC to craft a bill that would make it easier for gig-economy app makers to continue to treat their workers as contractors, loosening New York’s current standards. The upshot for workers is that it’d be much easier for the companies to contribute a portion of their revenue to so-called portable benefits, funds for expenses like sick pay that workers could keep if they switch jobs.

According to a draft circulated privately by Handy last spring and reviewed by Bloomberg Businessweek, workers whose companies devoted 2.5 percent of each transaction to the funds would be deemed contractors as long as their contracts call them such, they’re allowed to choose their schedules and work for other companies, and they pay the taxes and provide their own tools. Although Handy says the language could change before the bill is introduced, Tech:NYC says no significant changes to the contractor criteria have been made so far.

State Senator Diane Savino, a former union official who plans to introduce the legislation this month with the assembly’s majority leader, says both labor and management stand to gain. “When you have stability in an industry, and predictability, it’s always better,” she says. “At the same time, it will provide some stability and protection for this shifting workforce.” Savino says workers who want full employee protections can work somewhere else.

Instacart and TaskRabbit support the legislation, and Tech:NYC’s members include Uber, Facebook, Google, EBay, Etsy, and Bloomberg LP, the parent of Bloomberg Businessweek. To help it make the case in Albany, where organized labor is still influential, Handy has engaged Bradley Tusk, an informal Uber adviser who managed Michael Bloomberg’s 2009 mayoral campaign, and Andy Stern, the former president of the Service Employees International Union who now advises companies including Airbnb.

Tusk says unions should make a deal with the tech industry in New York to avoid less favorable changes likely to come from a Republican-controlled Washington. Stern says they should look at the bill as a way to start finding new roles, such as administering the kind of benefit funds it outlines, or working with businesses to create groups that represent contractors without collective bargaining rights, like the Uber-funded guild the company formed last year with the International Association of Machinists and Aerospace Workers. “There’s an existential threat,” says Stern. “If that doesn’t motivate them to find new ways of representing workers, then you can invite me to the funeral.”

The Uber-funded affiliate of the machinists union has discussed the bill with Handy and says New York should do something about benefits for contractors. But many unions, including Stern’s former colleagues, are leery of trading away employee protections. “This is really going more to the 19th century Victorian way of treating workers, in which workers are basically an expense to the company,” says Hector Figueroa, who heads SEIU’s East Coast property-services affiliate. “You’re basically tying the hands of these workers to be able to improve their conditions.” And portable-benefit funds are unlikely to match even a fraction of the value of union benefits.

Although a Handy victory in New York wouldn’t change how workers are classified under federal law or in other states, the company is betting the Savino bill can become a national model, especially given its Democratic origins. “We did want a state that was credible in terms of being progressive,” says communications head Alyssa Cass. “No one says, ‘As Kansas goes, so goes the nation.’ ”

To the former workers who’ve sued Handy, the company’s lobbying efforts are a sign that it’s worried about its prospects in court. “They’re still an employer, they’re just using an app to employ people,” says Kameisha Wilson, a New Yorker who’s joining the federal suit. “Every law that applies to anyone else should apply to us.”

The bottom line: Home-services startup Handy is leading the push for looser standards for tech companies that run on contract labor.

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